Walmart has been toying with a deal to get Flipkart for a while—and it looks like the big-box retailer is ready to officially move forward.
Reuters is reporting that Walmart recently wrapped up due diligence on a deal that would see it take at least a 51 percent stake in the Indian retailer. The acquisition, which is said to have been vetted by the company’s shareholders, would be for $10 to $12 billion, valuing Flipkart at $20 billion, according unnamed sources.
If Walmart were to close a deal for Flipkart, it would be a major achievement given the online retailer is the leading e-commerce player in India. Though Amazon has been making in-roads, at a cost of more than $5 billion, it lags behind Flipkart, which launched there—by former Amazon employees—first and holds roughly a 40 percent market share.
Walmart’s interest in Flipkart dates back years. In 2016, the retailer was rumored to be interested in a minority stake. Then more recently, a reported trip to Flipkart headquarters by Walmart CEO Doug McMillon and his team made news in January. At the time, undisclosed sources said the retail giant was again eyeing just a piece of the company, around a 15 percent to 20 percent stake.
If a transaction materializes, the insiders have said stakeholders Tiger Global Management, Accel Partners and Naspers are likely to sell to Walmart outright. SoftBank, which controls about 20 percent of the company, would likely also offer up some shares.
Though a Flipkart/Amazon deal has been speculated about as well, the sources say it isn’t likely given that the combined companies could spark antitrust concerns.
The attraction to India is clear. The country is on pace to be the most populated nation in the world in the next five years, according to the United Nations. Further, Morgan Stanley anticipates online sales revenue to hit $137 billion by 2020.